The legitimacy of governments and of economic policies

from Grazia Ietto-Gillies In the last few weeks there has been much concern and writing about legitimacy and democratic deficits in connection with the technocratic governments in Greece and Italy. The concern on the latter refers to the fact that the heads of these two governments and (all or most of) their ministers are not [...]

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The technocratic governments in Italy and Greece are not off to a smooth start judging from the action in the bond market. A quick glance at the 10-Year note in Italy shows the yield is up 25 basis points to 6.70% and the Spanish 10-year note is up 24 basis points, soaring through the 6% mark to 6.09%.Meanwhile, Greek 1-year bonds are trading at a mere 250%. Any bets on when they exceed 300%?

The Greek drama is approaching the long awaited climax. An emergency heads of state summit will be held on Monday, followed by the regularly scheduled summit later in the week. At the same time, the banking crisis threatens to eclipse the sovereign crisis in terms of urgency. The accelerated flight of deposits from Greek banks, and the two extensions of ELA lending last week warn of the untenable status quo. Without that extension of ELA lending before the weekend, an ECB official expressed concern that Greek banks might not be able to open on Monday

OTTAWA — No matter which political party wins the Oct. 19 federal election, many Canadians already have a good idea of what economic policies they want to see implemented when all the votes are counted.
Here’s a hint: Balancing the budget does not top their lists.

The outlook for Canada’s economy is becoming increasingly tentative, and that is putting key reforms— from erasing government deficits to heftier pension payments — out of reach for now.
Finance ministers across the country share the same roadblocks to growth as their federal counterparts. Attempts to clear those away have been set back by economic problems beyond their control.

Over at Equitable Growth: When I was taught economics lo more than a generation ago now, I was taught that there were six major and significant political-economic market and governance failures that called for action: READ MOAR

Yesterday, the UK and the US both reported new numbers for economic growth. In the UK, Q3 GDP was adjusted down to 2.6%. Across the pond, growth was a massive 5%. The pace of growth in America is roughly twice that of Britain, in other words.

The economic danger that people are best able to imagine is some form of collapse. The financial system goes the way of Lehman. The government goes the way of Greece. So far as calamities go, these are pretty simple ones, and noticeable enough that we can all call up examples. We've also been taught to fear inflation, as that was the big problem in the '70s, and is also what the Federal Reserve takes to be its archenemy.